'Dirtier' gas may help cut prices

SAN FRANCISCO — State air pollution regulators said Monday that California's air quality is not expected to worsen appreciably after the governor ordered the release of a dirtier blend of gasoline to help slash record-high pump prices.

The California Air Resources Board issued a regulatory advisory a day earlier after Gov. Jerry Brown ordered them to allow so-called "winter-blend" gasoline to be sold in California earlier than usual to increase supply.

AAA said the average price for a gallon of regular hit $4.668 Monday in California — the highest price in the nation and an all-time high for the Golden State. Analysts said the spike has been driven by refinery disruptions and corrosion issues in an important pipeline.

"This action is necessary to address the extreme and unusual fuel supply circumstance," said the board's advisory allowing the use of the more polluting fuel. "(It) is necessary for the immediate preservation of the public peace, health and safety or general welfare."

California usually converts to the gas on Oct. 31. The fuel evaporates in heat more quickly than summer-blends, so sends more pollutants into the environment, especially in warm weather.

Gil Duran, a spokesman for Brown, said the governor looked at all the options available, particularly scientists' prediction that such a change would not have a significant effect on the environment and "when he learned this could increase the supply by 8 to 10 percent, it just made sense."

Sunday's action was the first time since 2005 — when gas supplies were affected by refinery disruptions in the wake of Hurricane Katrina — that the air board has approved early conversion to winter-gas blends.

Officials said it could take days before prices fall, depending on how quickly refineries can get the winter-blend fuel to market.

"The gasoline market moves on news, and this is clearly good news in terms of supply, because it should be able to increase supply immediately," said Alison apRoberts, a spokeswoman with the California Energy Commission.

The third day of record-setting prices at the pump has also prompted calls for a federal investigation.

Sen. Dianne Feinstein, D-Calif., called on the Federal Trade Commission to investigate, saying residents need to be protected from "malicious trading schemes."

FTC Chairman Jon Leibowitz said the agency does not confirm investigations "but we do have enormous respect for Senator Feinstein."

Feinstein has asked the FTC to determine if the price spike was caused by illegal manipulation of the market and to start monitoring the market for fraud, manipulation, or other malicious trading practices. "Publically available data appears to confirm that market fundamentals are not to blame for rising gas prices in California," she wrote.